Rate hike to tamp down inflationary pressures: Rajan

The Reserve Bank of India has not raised interest rates to fight off the recent global emerging market sell-off, but to tamp down inflationary pressures, Governor Raghuram Rajan said on Wednesday.

"I think for (some) time we have been saying very clearly we are focused on preserving the value of the rupee, in the domestic context," he told analysts on a conference call a day after the central bank unexpectedly raised its key rate by 25 basis points.

"Preserving it in the domestic context will preserve it in the international context. Preserving in the domestic context means bringing inflation under control. Once we do that, we believe investor confidence naturally follows," he said.

Rajan also said that he would have liked to see a greater reduction in core inflation.


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